The Rudd government will “re-examine” controversial cuts to university funding, with savings possibly found by capping the number of undergraduate students able to study.

Universities have been waging a fierce and effective campaign against the shock announcement in the 2012 budget that $2.3bn would be cut from higher education to help fund the so-called Gonski reforms to schools funding.

But Kim Carr, who has returned to his old innovation portfolio and also has responsibility for higher education, told Guardian Australia that “while the budgetary situation is very tight … there will need to be a re-examination where possible of the funding priorities in higher education”.

“The universities have been running a campaign and they have conveyed important messages to the government and I will be talking to them about the effects of those cuts,” Carr said, adding that he thought the total amount sliced from higher education had actually been $3.8bn.

Carr also hinted he could find savings by changing Labor’s demand-driven system, which has seen a huge increase in the number of students undertaking undergraduate courses.

“Under this system an extra 190,000 students have studied at university who may not otherwise have done so,” he said.

“That’s a tremendous opportunity for working-class students but we have to make sure that across the system quality also remains a priority. I am a very strong believer in equity, but I am also a believer in excellence,” Carr said.

“So I need to consider whether it is appropriate here to re-examine the growth rates in the university system.”

In his budget in May, the then treasurer, Wayne Swan, announced higher education cuts including an efficiency dividend of 2% in 2014, and 1.25% in 2015, the removal of a 10% discount for upfront payments of Higher Education Contribution Scheme (HECS) loans and a conversion of student startup scholarships to HECS loans.

Carr will be sworn in later on Monday. He held the portfolio of industry, innovation, science and research from the beginning of the Rudd government until December 2011 when he was demoted by the prime minister, Julia Gillard. He held other portfolios until the leadership showdown in March this year, in which Rudd did not stand, after which he went to the backbench.